Ajax and Brindel Corporations Have Filed Consolidated Returns for Several

question 58

Multiple Choice

Ajax and Brindel Corporations have filed consolidated returns for several calendar years.Ajax acquires land for $60,000 on January 1 of last year.On September 1 of this year,Ajax sells the land to Brindel for $90,000.The basis and holding period for the land acquired by Brindel are:

• A) \[\begin{array} { | l | l |}
• \hline &\text { Holding Period Begins } \\
• \text { Basis } & \text { On } \\
• \hline \$ 60,000 & \text { january 2 of last year } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline &\text { Holding Period Begins } \\
• \text { Basis } & \text { On } \\
• \hline \$ 90,000 & \text { Tanuary 2 of last year } \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline &\text { Holding Period Begins } \\
• \text { Basis } & \text { On } \\
• \hline \$ 90,000 & \text { September } 2 \text { of this year } \\
• \hline
• \end{array}\]
• D)none of the above

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Definitions:

Ending Inventory

The monetary amount of stock available for purchase at the end of an accounting term, which is the sum of the opening inventory and purchases, less the cost of goods sold.

Retail Inventory Method

An accounting procedure for estimating the final inventory balance of a retailer by using percentages of gross margins based on sales and the cost of goods sold.

Ending Inventory

The sum value of inventory available for purchase at the end of an economic period.

Beginning Inventory

The value of all the goods available for sale at the start of an accounting period; essentially the remaining inventory from the previous period.